Recently, a British court handed down a 100 page-plus IP judgment concerning the use of logos by two leading supermarket chains, Lidl and Tesco.
Lidl has a trade mark registration in the United Kingdom for a logo that features a yellow circle on a blue background, with the name Lidl appearing in the circle in a stylised form and in the colours blue and red. It also holds registrations for the logo without the word Lidl. Tesco adopted and used a logo that features a yellow circle on a blue background, with the phrase "Clubcard Prices" appearing in the circle in black plain script. Lidl successfully sued Tesco for trade mark infringement.
Image source: Unsplash
The court held that the logos were similar and likely to cause confusion, which was substantiated by survey evidence. The court said that the evidence from members of the public spoke of the Tesco logo being "uncannily similar to the Lidl logo", as well as "blatant mimicry". The court went on to say that the differences in the text did not have "the effect of extinguishing the strong impression of similarity conveyed by their backgrounds in the form of the yellow circle, sitting in the middle of the blue square."
Lidl's case, however, was not about consumer confusion, but rather trade mark dilution in terms of section 10 (3) of the trade mark legislation in the United Kingdom. We have similar legislation in South Africa. Lidl claimed that its trade mark enjoys a reputation and Tesco is guilty of free-riding.
Tesco acknowledged that Lidl's mark had the required reputation and, based on the survey evidence that was submitted, the court held that the average consumer would make a link between the two marks. A few witnesses gave evidence saying that they had written to Lidl to complain about the Tesco mark, thinking there was a link between the two. The judgment refers to Tesco's internal teams themselves raising concerns about the similarities between the two logos.
Lidl claimed that Tesco had intended to cause detriment to the distinctive character of the Lidl mark, or to take unfair advantage of it. There was, however, no evidence to support this alleged intention. The evidence simply pointed to the fact that Tesco had sought to promote its clubcard. That said, the court did say that, although there may have been no intention on the part of Tesco to free-ride, this had in fact been the effect, and held that a "subtle and insidious transfer of image" had occurred between the brands.
Arising from Tesco's actions, Lidl had been required to launch a counter-advertising campaign called "Unmatched Value" to counter the use of the Tesco logo.
The court found that the combination of yellow and blue was unique to Lidl and that there was no due cause for Tesco's use of a similar logo.
The court made an interesting finding about Lidl's registrations for the logo without the word mark Lidl. It said that assuming these registrations are valid they too have been infringed. This logo has, in fact, never been used on its own, but the court ruled that it is not open to attack for non-use because Lidl has been using it each time it uses the full mark, in other words with the word Lidl.
The court, however, went on to rule that the registrations for the logo without the word Lidl may well be open to attack on the basis of bad faith, as they were filed without a bona fide intention to use the mark. The court referred to "evergreening", defining it as "periodic re-registration" which is aimed at avoiding a non-use attack.
The court held that there was passing off too – a substantial number of consumers had been deceived and Lidl has suffered damage.
The court ended by holding that the Lidl logo enjoys copyright protection too, through its "combination of text colours and shapes". The court made the point that there was no actual evidence of copying, but "copyists are most unlikely to ever admit to copying."
An emphatic win for Lidl, but Tesco has said that it intends to appeal.
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